| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.9% | -2.4% | 17.2% |
| 2025 |
|---|
| 17.2% |
The Baillie Gifford International Growth Fund declined in Q4 2025 despite a strong market backdrop, underperforming its benchmark as growth stocks faced headwinds. Key detractors included Spotify, Sea Limited, and Ferrari, while Advantest, DSV, and TSMC contributed positively. The fund initiated a new position in SK Hynix, a leading memory chip manufacturer positioned to benefit from structural AI demand through its technological leadership in high-bandwidth memory. This position was funded by reducing semiconductor holdings, primarily Advantest, following strong performance. The managers maintain their long-term growth focus, emphasizing that share prices follow earnings growth over time. They remain confident in portfolio companies' ability to capitalize on global change, particularly in AI-driven semiconductor demand, e-commerce expansion in emerging markets, and streaming platform monetization. With 87% active share and 22% annual turnover, the fund continues its genuinely active approach, investing in exceptional businesses with five-year research horizons while staying disciplined through market volatility.
The fund aims to produce good long-term performance by investing in a committed portfolio of international growth stocks with the potential to grow substantially more quickly than the market, conducting research with a five-year time horizon and maintaining genuinely active positioning with low turnover.
The managers remain confident in their team, process, and the ability of portfolio companies to capitalize on profound global change and translate that into long-term earnings growth. They acknowledge they cannot time market style shifts but maintain conviction that share prices follow earnings growth over time, with evidence that the Fund's earnings power can outpace the market.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | 1299.HK, 6146.T, 6857.T, 6861.T, ADYEN.AS, ARGX, ASML, ATCO-A.ST, DSV.CO, GALP.SW, MELI, NU, OR.PA, RACE, RMS.PA, SE, SHOP, SPOT, TSM, WTC.AX | AI, E-Commerce, growth, international, semiconductors, technology |
SPOT SE RACE DSV DC GALD SW |
Artificial intelligence demand is driving structural growth in semiconductor testing equipment and memory chips. Advantest benefits from sustained AI data center investment with improved visibility, while SK Hynix leads in high-bandwidth memory (HBM) technology critical for AI infrastructure bottlenecks. The fund maintains significant exposure to semiconductor leaders across the value chain. TSMC and ASML delivered strong performance, while new position SK Hynix represents technological leadership in memory chips with two-year order book visibility driven by structural AI demand. Sea Limited showed strong growth with group revenues rising 40% year-on-year, led by Garena gaming and Shopee marketplace expansion. Management continues investing in logistics and fulfillment infrastructure despite near-term profitability pressures in Latin American operations. Spotify demonstrated continued operating progress with 11% user growth to 713 million and 12% subscriber growth to 281 million. Operating margins expanded to mid-teens with record quarterly free cash flow, supported by pricing optimization and advertising efficiency improvements. |
| Oct 20 2025 | 2025 Q3 | - | Artificial Intelligence, Biotechnology, Digital Platforms, Healthcare Innovation, Long-Term Growth |
ADYEY SPOT MELI ASML NA |
The fund emphasizes long-term growth driven by innovation in AI, healthcare, and digital platforms despite short-term volatility. Managers highlight holdings such as NVIDIA, ASML, and Moderna as structural winners transforming industries from automation to medicine. They maintain conviction in global disruptors whose technologies enable productivity gains and sustainable progress. |
| Jul 11 2025 | 2025 Q2 | - | disruption, innovation, International Growth, long-term, Reinvestment | - | The letter emphasizes long-term international growth investing focused on companies with large addressable markets and the ability to reinvest capital at high rates of return. Managers stress patience through volatility as innovation cycles, particularly in technology and healthcare, take time to translate into earnings. Valuations are considered secondary to the durability and scale of long-term growth opportunities. |
| Apr 18 2025 | 2025 Q1 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
E-commerceSeveral investments in e-commerce leaders across Asia and Latin America, including MercadoLibre, Sea Limited and Alibaba, faced a more competitive operating environment during the period. As long-term investors, SGA observes that competitive intensity in these markets tends to ebb and flow over shorter time horizons, with market leaders typically emerging from such periods with strengthened strategic positions given inherent network effects. |
Marketplaces Competition Network Effects Asia Latin America | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
StreamingNetflix represents the fund's exposure to global streaming entertainment, despite near-term headwinds from subscriber growth concerns and content spending. The fund continues to view Netflix as the dominant global streaming platform with durable competitive advantages through its content library, technology infrastructure, and growing advertising business. |
Content Global Advertising Platform Entertainment | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
Innovation |
||
| 2025 Q2 |
Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 15, 2026 | Fund Letters | Tom Coutts | SPOT | Spotify Technology S.A. | Communication Services | Interactive Media & Services | Bull | New York Stock Exchange | advertising, AI, Margins, Streaming, Subscriptions | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | ADYEY | Adyen N.V. | Information Technology | Financial Technology | Bull | Euronext Stock Exchange | Digital, Fintech, guidance, Payments, profitability, Scalability, tariffs | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | SE | Sea Limited | Consumer Discretionary | Internet Retail | Bull | New York Stock Exchange | ecommerce, Fintech, Gaming, Logistics, scale | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | RACE | Ferrari N.V. | Consumer Discretionary | Automobiles | Bull | New York Stock Exchange | Autos, Brand, Luxury, Pricingpower, Scarcity | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | SPOT | Spotify Technology S.A. | Communication Services | Entertainment | Bull | NYSE | Audio, FCF, growth, Margins, monetization, Streaming, Users | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | MELI | MercadoLibre Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | Brazil, e-commerce, Fintech, GMV, growth, Logistics, Margins | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | DSV DC | DSV A/S | Industrials | Air Freight & Logistics | Bull | NASDAQ | Integration, Logistics, Margins, scale, synergies | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | ASML NA | ASML Holding N.V. | Information Technology | Semiconductor Equipment | Bull | Euronext Stock Exchange | AI, Equipment, Euv, growth, Margins, Monopoly, semiconductors | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | GALD SW | Galderma Group AG | Health Care | Pharmaceuticals | Bull | Swiss Exchange | Aesthetics, dermatology, growth, Launches, Validation | Login |
| TICKER | COMMENTARY |
|---|---|
| 1299.HK | Proceeds were deployed to three Asian companies: 1) Alibaba Group Holding is the largest Chinese e-commerce and cloud company, which has stabilized its e-commerce business and invested in the growing cloud business; 2) Asian insurance company AIA Group Limited is leveraging growing demand from Hong Kong, China and other Asian countries; and 3) Chinese company Ping An Insurance may benefiting from the structural demand for health and protection products given the aging population and limited coverage of national insurance. |
| 6857.T | Advantest is a leading provider of semiconductor test equipment. Results exceeded expectations, with management meaningfully raising guidance, citing sustained demand tied to artificial intelligence data center investment and improved visibility. Held in the Fund since the second quarter of 2024, Advantest has been a top contributor to performance, reflecting its mission-critical role in advanced testing and deep customer relationships - attributes that should support attractive growth as semiconductor complexity rises. |
| ARGX | Shares of argenx SE contributed to performance, rising 14.0% during the fourth quarter and finishing 2025 up 37.8%. Argenx is a leading biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Sales of Vyvgart continue to progress well in Generalized Myasthenia Gravis (Generalized MG) while the Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) launch is also off to a strong start. |
| ASML | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| ATCO-A.ST | Atlas Copco supplies industrial products and components, such as vacuum valves, air compressors, filters and pumps, into a wide variety of end markets. We expect the businesses we own to be commercially ambitious and look to grow their revenue faster than the markets they serve – even more so when those markets are challenged. We sold Atlas Copco in May, having become disappointed with its lack of observable self-help initiatives. |
| DSV.CO | DSV A/S was one of the top five winners for the quarter. |
| MELI | E-commerce Volatility: turbulence in our e-commerce portfolio companies, Sea Ltd (Southeast Asia) and MercadoLibre (Latin America), amidst aggressive price wars. |
| NU | Since our mid-year update, Nubank's shares increased 37%, bringing full-year performance to +63%. This performance has been driven primarily by fundamentals, with earnings growing approximately 42% over the same period. Brazil remains a powerful profit engine, with high customer engagement, improving risk-adjusted returns, and expanding penetration across consumer and SME banking. Mexico continues to emerge as the next major growth vector: customer penetration has reached ~14% of the population. |
| OR.PA | In 2024, it seemed to us that other investors were unduly focused on a slowdown in consumer spending in China, an important market for L'Oréal yet contributing only 17% of its sales. L'Oréal is a broad, balanced business such that in any given year, faster-growing parts of the world will typically offset the weaker ones. We saw this in 2025, where strength in markets such as Europe, the Middle East and South America offset sluggish markets in China and the US, allowing L'Oréal to deliver a year of solid earnings growth. |
| RACE | Our largest common stock holding is Ferrari. Over the last three years we have purchased 543,800 shares. At year-end, our investment in Ferrari was valued at $202.3 million. When we started purchasing shares in 2022, we were thinking about what the company would look like in two decades. Ferrari's vehicles will, of course, continue to change over the coming years, but we think the reasons people will choose the brand in the 2040s will be nearly the same as they are today. We believe Ferrari is one such company that has sustained its competitive edge. |
| RMS.PA | Hermès was founded in Paris in 1837 as a maker of harnesses and saddles for Europe's horse-drawn elite. From the outset, the company was defined by functional excellence and craftsmanship rather than fashion. Today, the group is one of the most profitable companies in global luxury, with activities spanning leather goods, ready-to-wear, silk, jewellery, watches and homewares. Despite operating more than 300 stores globally and employing over 20,000 people, Hermès continues to behave less like a conglomerate and more like a craft maison, prioritising long-term brand equity over near-term growth. This mindset underpins why we find Hermès such a compelling business. Its brand equity is built not on seasonal fashion or loud marketing but on function, heritage and longevity. Hermès has delivered exceptional consistency in returns on capital and earnings through cycles, underpinned by disciplined supply, minimal discounting and limited fashion risk. This reduces downside volatility and supports higher through-cycle multiples. The benefits of the Hermès model have been particularly evident through the recent challenging period for the luxury sector. Slowing global demand, softer Chinese consumption and inventory pressure have led to revenue declines and margin contraction for many peers. Hermès has stood apart. Growth has moderated but remained positive, margins have proven resilient, and inventory discipline has been maintained. |
| SE | During the quarter, we initiated a new position in Sea Limited, a Southeast Asian consumer internet company with an integrated ecosystem combining e-commerce, digital payments, and entertainment. Sea has a diversified business model, with its Shopee e-commerce platform, a mobile-centric marketplace that provides integrated payments, logistics infrastructure, and seller services. |
| SHOP | Shopify Inc. is a cloud-based software provider for multi-channel commerce. Shares rose 8.3% in the fourth quarter, finishing 2025 up 51.1% on strong financial results that outperformed Street expectations. The company is demonstrating rapid growth at scale with gross merchandise value (GMV) and revenues each growing over 30% year-on-year. |
| SPOT | Spotify is the world's leading audio streaming platform. Third-quarter results showed continued operating progress, with users increasing 11% to 713 million and subscribers growing 12% to 281 million. Meanwhile, operating income expanded to a mid-teens margin, alongside a record quarterly free cash flow. Despite the momentum, the shares weakened as investors reset near-term margin expectations. Spotify has been a top contributor to long-term Fund performance, and we remain confident that pricing, product innovation, advertising efficiency, and an expanding ecosystem can continue to widen margins over time, as reinforced this quarter by the launch of Spotify recommendations within ChatGPT. |
| TSM | TSMC was a top contributor during the quarter, driven by robust demand for advanced semiconductor manufacturing and improved gross margins as AI continues to grow strong and the non-AI segment showed signs of recovery. Management raised its revenue growth guidance to the mid-30% range, and given continued strength in demand, AI-related growth targets are expected to move above the current mid-40% level. |
| WTC.AX | In contrast, the Fund's largest detractors were Pro Medicus, REA Group and WiseTech Global, which declined by 11.5%, 20.3% and 43.3% respectively. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
